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Cartco needs to borrow $5 million for an upgrade to its headquarters and manufacturing facility. Management has decided to borrow using a five-year term loan from its existing commercial bank. The prime rate is 3.25 percent and the Cartco's current credit rating is prime + 2.48 percent. The yield on a five-year U.S. Treasury note is 2.01 percent and the three-month U.S. Treasury bill rate is 0.09 percent. What is the estimated loan rate for the five-year bank loan?

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